“Populist Policy” Thailand’s debt trap-buying voters

Nikkei Asia analyzes the campaign policies of Thai political parties, noting that electioneering is being driven by populist policies designed to win over the public ahead of the polls. As a result, debates on trade and industrial development have been sidelined despite the current economic slowdown. Analysts warn that such profligate fiscal policies may undermine national competitiveness and create a long-term burden for taxpayers.

These populist platforms are often framed as "short-term stimulus for long-term results," such as the Half-Half Plus policy from the Bhumjaithai Party. Following its success in easing the immediate cost-of-living burden during their time in government, Mr. Anutin Charnvirakul announced that if the party earns the people's trust and successfully forms a government, he is ready to continue this policy immediately.

Furthermore, Mr. Varawut Silpa-archa, a party-list candidate for the Bhumjaithai Party, stated during a debate at the Foreign Correspondents' Club of Thailand (FCCT) that "the Half-Half policy aims to reduce the public's expenditure burden as a way to build towards a sustainable economy." This raises the question of how easing expenses in intermittent phases can lead to systematic and stable economic development for Thailand.

On the side of the Pheu Thai Party, whose strength lies in populist policies, often referred to as "consumable democracy", a controversial policy was unveiled in the final stretch of the campaign, the 9 Millionaires a Day policy. The stated goal is to "draw people into the tax system and stimulate public spending."

However, many politicians, academics, and citizens view such policies as fueling an addiction to cash handouts and encouraging laziness, which will ultimately diminish the country’s competitiveness.

Additionally, Mr. Korn Chatikavanij, deputy leader of the Democrat Party and a prime ministerial candidate, criticized this policy on his personal Facebook page, describing it as "the shameless distribution of tax money without clear economic or social objectives." This invites further questioning as to whether distributing money to citizens daily is a cost-effective use of a budget that could otherwise be used for systematic economic development or infrastructure, even if the intent is to pull people into the tax system or stimulate the economy.

The Democrat Party itself has proposed a policy to provide a monthly subsidy of 5,000 baht for newborns for 12 months, along with increasing the living allowance for the elderly and disabled to 1,000 baht per month. Similarly, the People's Party has proposed comparable schemes, such as subsidizing 50% of house rental fees for 500,000 households per year, as well as providing 1,000 baht monthly subsidies to the elderly and parents of newborns.

Asst. Prof. Dr. Wanwichit Boonprong, from the Faculty of Political Science at Rangsit University, points out that these populist policies are piling up public debt, which is currently about to reach the fiscal discipline ceiling. This accumulating debt will have a significant impact on Thailand’s economic system.

Undoubtedly, under Thailand's current economic conditions, both short-term and long-term injections are necessary. Yet, a final question remains, have we made a genuine effort to use taxpayer-funded budgets for long-term economic stimulation?

If Thai society remains tethered to unplanned "cash handout" policies, a systematic and stable economy, efficient manufacturing industries, and robust service and tourism sectors may remain nothing more than a distant dream.

SOURCE: Nikkei Asia